There could be more consolidation in banking: Thain

CIT Group finally completed its $3.4 billion purchase of OneWest Bank on Monday, and CEO John Thain thinks it could mean more consolidation is on the way.

"It says you can do deals," he told CNBC's "Closing Bell" in an interview. "There should be more consolidation in the banking industry, and particularly for institutions that are below $100 billion. I think this is a good sign."

The purchase of Pasadena, California-based OneWest Bank was approved by regulators in July despite opposition from those afraid of creating another bank that could become "too big to fail." At a size of larger than $50 billion, the bank also crosses into "systemically important" territory, though Thain believes the label to be misleading.

"From a financial risk point of view in terms of do we really represent a risk to the financial system, the answer is absolutely not," he said. "There's already talk about raising that $50 billion limit to some number—$100 [billion] or higher—and I frankly think they should do that."

As for the last institution he ran, Thain said he had no choice but to sell Merrill Lynch to Bank of America during the peak of the financial crisis. However, he might not make the same decision today.

"I don't think it's clear the synergies that people expected are really there," he said, adding that since the pieces had been integrated, it probably wouldn't be viable to split the two off at this point.